Interim Results
Monks Investment Trust PLC
26 November 2003
26 November 2003
THE MONKS INVESTMENT TRUST PLC
Results for the six months to 31 October 2003
Set out below, is the text of the announcement made in respect of The Monks
Investment trust PLC results. Before reading this or investing in shares in The
Monks Investment trust, you should be aware of a number of risk factors:
• Past performance is not necessarily a guide to future performance.
• The capital value of shares in any investment trust and income distributed
may fluctuate in accordance with the underlying performance of the shares
and securities in which the trust invests.
• In addition, as the shares in an investment trust are traded on a
stockmarket, the share price will fluctuate in accordance with supply and
demand and may not reflect the underlying net asset value of the shares;
where the share price is less than the underlying value of the assets, the
difference is known as the 'discount'. For these reasons, investors may not
get back the original amount invested.
• Charges are deducted from income and where income is low, expenses may
exceed total income received. In these circumstances, the Trust's capital
reserves may be eroded. The generation of income is of secondary importance
to the Trust.
• Investment trusts may borrow money in order to make further investments.
This is known as 'gearing' and can enhance shareholder returns in rising
markets but, conversely, can reduce them in falling markets.
• Derivatives may be entered into to hedge against various risks, such as
adverse currency and market fluctuations. As a result, in a rising market
there is the possibility that potential gains may be restricted.
• An increase in the strength of sterling may adversely affect the sterling
denominated value of the trusts' assets and have a negative effect on the
sterling quoted prices.
• The staff of Baillie Gifford & Co. and/or trust directors may have
positions in the securities mentioned herein or may buy, sell or offer to
make a purchase or sale of such securities from time to time.
THE MONKS INVESTMENT TRUST PLC
Results for the six months to 31 October 2003
Monks' net asset value rose by 16.4% which was 4.3 percentage points ahead of
the comparative index (FTSE World Index in sterling terms).
• Positive gearing and increased exposure to Japanese and Far Eastern markets
were responsible for the relative out performance over the period.
• Exposure to Far Eastern markets including Japan, where additions were made
during the period, has risen from 13.4% of assets to 19.4%. Exposure to
high yield bonds was reduced during the half year while cash balances rose
from 0.6% to 2.0%.
• The interim dividend has been maintained at 0.4p.
Monks, with total assets of £686 million, invests internationally in order to
achieve capital growth.
26 November 2003.
- ends -
For further information please contact:
Richard Burns, Manager
The Monks Investment Trust PLC 0131 275 2000
Robert O'Riordan
Baillie Gifford & Co. 07730 412007
Mike Lord, Director
Broadgate Marketing 020 7726 6111
Baillie Gifford & Co. is authorised and regulated by the Financial Services
Authority. Investment Trusts are UK public limited companies and as such are not
authorised or regulated by the Financial Services Authority.
THE MONKS INVESTMENT TRUST PLC
Interim Report 31 October 2003
After three years of generally falling equity markets, it is a relief to be able
to report on a better six months. It would appear that the bear market which
began with the bursting of the technology bubble in the spring of 2000 bottomed
in the middle of March this year. Since then there has been a strong worldwide
rally in equity markets; bond markets on the other hand have fallen noticeably
from the high point that was touched in June, particularly in the UK.
Against this background Monks' net asset value per share (NAV) rose by 16.4% to
194.9p from 167.5p. This compares with a rise of 12.1% in the FTSE World Index.
The best performing markets were in the eastern hemisphere, with the Pacific
ex Japan index rising by 27.4% and Japan itself by 33.8% (both figures in
sterling). Progress in the west was more sedate, with the British market up by
12.4%, Europe by 11.7% and the US, because of dollar weakness, lagging with an
increase in sterling terms of only 7.9%.
The main reasons why Monks' NAV rose by significantly more than the comparative
index were our level of gearing (borrowings at the start of the year of £112.9m
were substantially higher than the holdings of £50.6m in cash deposits and
bonds), our significant and increasing exposure to Far Eastern markets and, on
balance, positive stock selection. Stock selection was better than the indices
in the UK, US and Asia Pacific, but lagged in Japan and Europe.
As can be seen from the Distribution of Assets table, there have been some
adjustments to our investment policy in the last six months. We invested £12m
in Japan and £11m in Asia Pacific which, combined with the strong performance in
those markets, has resulted in our Far Eastern exposure rising to 19.4% of
assets from 13.4%. Elsewhere, however, sales have exceeded purchases by £27m
including a reduction of £3.5m in our holding in the Baillie Gifford High Yield
Bond Fund, and as a consequence cash balances have risen to 2.0% from 0.6%.
The discount on our shares has fluctuated in a band between 16% and 12% during
the period under review, without any clear trend developing. This broadly
reflects experience elsewhere in the investment trust market.
Our fixed interest sales last year, together with a higher management fee as our
assets have risen, have had a negative impact on the revenue account, with
earnings per share falling to 0.30p compared with 0.41p a year ago. The Board
has decided to maintain the interim dividend at last year's level of 0.40p which
will be paid on 30 January 2004, but this should not be taken as an indication
of the level of the final dividend.
By order of the Board
Baillie Gifford & Co.
25 November 2003
The following is the interim statement for the six months ended 31 October 2003
which has been neither reviewed nor audited by the auditors. This statement is
being printed and will be sent to all shareholders on 11 December 2003. Copies
will be available for inspection at the Registered Office of the Company or may
be obtained on request from the Managers and Secretaries after that date.
THE MONKS INVESTMENT TRUST PLC
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
for the six months ended for the six months ended for the year ended
31 October 2003 31 October 2002 30 April 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised losses on - (2,482) (2,482) - (24,546) (24,546) - (41,018) (41,018)
investments
Unrealised gains/(losses) - 82,316 82,316 - (130,769) (130,769) - (118,367) (118,367)
on investments
Currency gains/(losses) - 1,050 1,050 - (1,081) (1,081) - (2,839) (2,839)
Income (note 3) 7,123 - 7,123 7,384 - 7,384 15,646 - 15,646
Investment management
fee (1,639) - (1,639) (1,523) - (1,523) (2,983) - (2,983)
Other administrative (358) - (358) (357) - (357) (703) - (703)
expenses
Net return before finance
costs and taxation 5,126 80,884 86,010 5,504 (156,396) (150,892) 11,960 (162,224) (150,264)
Finance costs of (3,682) - (3,682) (4,139) - (4,139) (8,147) - (8,147)
borrowings
Return on ordinary
activities before
taxation 1,444 80,884 82,328 1,365 (156,396) (155,031) 3,813 (162,224) (158,411)
Tax on ordinary (559) - (559) (160) - (160) (753) - (753)
activities
Return on ordinary
activities after
taxation 885 80,884 81,769 1,205 (156,396) (155,191) 3,060 (162,224) (159,164)
Dividends in respect
of (1,177) - (1,177) (1,070) - (1,070) (2,983) - (2,983)
equity shares
Transfer (from)/to (292) 80,884 80,592 135 (156,396) (156,261) 77 (162,224) (162,147)
reserves
Return per ordinary
share
(note 4) 0.30p 27.48p 27.78p 0.41p (52.67p) (52.26p) 1.04p (54.87p) (53.83p)
Dividend per ordinary
share (note 5) 0.40p 0.40p 1.05p
* The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operations.
THE MONKS INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 31 October 2003
(unaudited)
31 October 31 October 30 April
2003 2002 2003
£'000 £'000 £'000
NET ASSETS
Fixed assets: investments 672,439 607,152 602,937
Net liquid assets 13,718 3,408 3,667
Total assets (before deduction of loans and debentures) 686,157 610,560 606,604
Loans and debentures (note 1) (111,878) (110,987) (112,917)
574,279 499,573 493,687
CAPITAL AND RESERVES
Called-up share capital 14,718 14,718 14,718
Capital reserves 542,665 467,609 461,781
Revenue reserve 16,896 17,246 17,188
EQUITY SHAREHOLDERS' FUNDS 574,279 499,573 493,687
NET ASSET VALUE PER ORDINARY SHARE
(after deducting prior charges at par) 194.9p 169.5p 167.5p
Ordinary shares in issue (note 2) 294,355,295 294,355,295 294,355,295
DISTRIBUTION OF ASSETS
at 31 October 2003
(unaudited)
31 October 31 October 30 April
2003 2002 2003
% % %
Equities: United Kingdom 22.6 25.6 24.1
Continental Europe 12.4 11.4 13.6
North America 35.7 36.6 38.2
Japan 9.4 7.4 6.5
Asia Pacific 10.0 6.7 6.9
Other Emerging Markets 1.4 1.1 2.4
Total equities 91.5 88.8 91.7
Sterling bonds 6.3 6.7 7.4
Euro bonds 0.2 3.9 0.3
Net liquid assets 2.0 0.6 0.6
Total assets (before deduction of loans and debentures) 100.0 100.0 100.0
THE MONKS INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 October 31 October 30 April
2003 2002 2003
£'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 7,059 8,906 13,133
NET CASH OUTFLOW FROM SERVICING OF FINANCE (3,669) (3,679) (8,150)
TOTAL TAX PAID (481) (462) (792)
FINANCIAL INVESTMENT
Acquisitions of investments (74,441) (178,491) (266,999)
Disposals of investments 80,930 194,001 287,248
Realised currency losses (5) (347) (32)
NET CASH INFLOW FROM FINANCIAL INVESTMENT 6,484 15,163 20,217
EQUITY DIVIDENDS PAID (1,913) (2,944) (4,121)
NET CASH INFLOW BEFORE FINANCING 7,480 16,984 20,287
FINANCING
Shares purchased for cancellation - (20,557) (20,557)
Bank loans repaid - - (34,291)
Bank loans drawn down - - 34,131
NET CASH OUTFLOW FROM FINANCING - (20,557) (20,717)
INCREASE/(DECREASE) IN CASH 7,480 (3,573) (430)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
DEBT
Increase/(decrease) in cash in the period 7,480 (3,573) (430)
Net outflow from bank loans - - 160
Exchange movement on bank loans 1,055 (734) (2,807)
Other non-cash changes (16) (16) (33)
MOVEMENT IN NET DEBT IN THE PERIOD 8,519 (4,323) (3,110)
NET DEBT AT START OF PERIOD (108,965) (105,855) (105,855)
NET DEBT AT END OF PERIOD (100,446) (110,178) (108,965)
THE MONKS INVESTMENT TRUST PLC
TWENTY LARGEST EQUITY HOLDINGS
at 31 October 2003
Name Business Market value % of total
£'000 assets
Baillie Gifford Pacific Fund Investment fund 47,090 6.9
Golden West Financial Savings and loans 23,672 3.5
Altria Tobacco and food 21,921 3.2
Suncor Energy Oil company 21,467 3.1
Vodafone Mobile telecommunication services 15,403 2.2
Pfizer Pharmaceuticals 13,035 1.9
GlaxoSmithKline Pharmaceuticals 12,645 1.8
Omnicom Advertising agency 11,756 1.7
Barclays Banking 10,797 1.6
Burlington Resources Natural gas 10,318 1.5
EOG Resources Natural gas 9,685 1.4
Moodys Bond rating agency 9,542 1.4
Royal Bank of Scotland Banking 8,684 1.3
Aberforth Limited Partnership Small company fund 8,586 1.3
HSBC Holdings Banking 8,408 1.2
Total Fina Elf Integrated oil 8,317 1.2
Freddie Mac Mortgages 8,269 1.2
Eli Lilly Pharmaceuticals 7,852 1.1
Wyeth Pharmaceuticals 7,803 1.1
State Street Custodian bank 7,405 1.1
272,655 39.7
THE MONKS INVESTMENT TRUST PLC
NOTES
1. Loans and debentures include US$35.7 million and Y2.14 billion (31 October
2002 - €50 million; 30 April 2003 - US$35.7 million and Y2.14 billion)
drawn down under a short term multi-currency loan facility.
The market value of debenture stocks at 31 October 2003 was £91,593,000
(31 October 2002 - £94,356,000; 30 April 2003 - £94,711,000).
2. At the AGM in August 2003 shareholders approved the renewal of the
Company's authority to buy back its own ordinary shares in respect of
44,123,858 ordinary shares of 5p each (equivalent to 14.99% of its
share capital at that date). No ordinary shares have been bought back
during the period under review and at 31 October 2003 the Company's
authority to buy back its own shares therefore remained unchanged at
44,123,858 ordinary shares.
31 October 31 October 30 April
2003 2002 2003
£'000 £'000 £'000
3. Income
Income from investments and
interest receivable 7,072 7,291 15,502
Other income 51 93 144
4. Return per ordinary share
Revenue return 885 1,205 3,060
Capital return 80,884 (156,396) (162,224)
Return per ordinary share is based on the above totals of revenue and
capital and on 294,355,295 (31 October 2002- 296,931,925; 30 April 2003 -
295,654,199) ordinary shares, being the weighted average number of ordinary
shares in issue during the period.
5. The interim dividend will be paid on 30 January 2004 to all shareholders on
the register at the close of business on 16 January 2004.
6. The financial information for the year ended 30 April 2003 has been
extracted from the statutory accounts, which have been filed with the
Registrar of Companies and contain an unqualified Auditor's Report.
7. The accounting policies applied in calculating the interim figures are
consistent with those used in the Annual Financial Statements. The Interim
Report was approved by the Board on 25 November 2003.
None of the views expressed in this document should be construed as advice
to buy or sell a particular investment.
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